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  • Landlords in Distress

    Sourcing agent inaccurate about discount

    Hi guys,

    I’m an aspiring landlord who made the rookie error of agreeing to pay part of a sourcing fee to an agent for an advertised £25,000 discount on a property a few months ago. The property was marketed to me at £125,000 (guide price £150,000)

    To make a long story short when I viewed the property I was told by the developer that the price that was quoted to me by the sourcing company was £5,000 higher than the guide price with their main estate agent which listed the property at £145,000. The main estate agent is a well known and reputable high street franchise. In essence the £25,000 discount suddenly became a £20,000 discount which is a substantial difference.

    I immediately brought my concerns to the agent and provided links to internet listings which confirmed that the current price of the property is £145,000. The agent reassured me that the listing was out of date and that the price was definitely £150,000 and that the £25,000 discount was genuine.

    I felt I wasn’t being dealt with fairly. There was a discrepancy between the sourcing agent’s price and the ones that were being marketed by the main high street estate agent. In addition the developer never heard of the sourcing agent I was dealing with. It turned out that there was a chain of agents involved in this transaction and this sourcing agent had no direct links to the developer or the main estate agent. I was not aware of this either so I decided not to proceed and asked for a refund of my fees shortly after the viewing.

    The sourcing agent has declined to issue me a refund. Instead they offered to pass my sourcing fee to another property transaction should I wish to consider another one of their options. However this agent is a member of the Property Ombudsman so there is an avenue to redress this situation.

    After further investigation I now have evidence that the property was reduced on the date that I signed the agreement to pay part of the sourcing fee in advance before the viewing. However these documents were not e-mailed to the sourcing agent until the day after. I also made it clear that I would only proceed if I was happy with the property after the viewing. In addition I have evidence that the sourcing agent kept on providing me with the incorrect re-assurances about the property’s price two weeks after the price had been reduced.

    I felt that the agent withheld important information. I feel I should have been made aware that they were marketing this property on behalf of another property / investment / sourcing agent as this would have influenced my purchasing decision. It is my understanding that agents must give accurate, honest and relevant information about the properties they are marketing. This was not the case with this transaction.

    Luckily a lot of what I have explained has been documented via emails. However I know that if I escalate this to the Property Ombudsman and ultimately loose the case, I will also loose the option of transferring the sourcing fee to another property transaction. Should I just bite the bullet and hope that the sourcing agent finds me a suitable property or do you think I am justified in escalating this to the ombudsman with a good possibility of having my fee refunded with their decision ?

    I would really appreciate your unbiased opinion on my situation.

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    Hi there... sorry to hear about this. Do you have any details of the refund (or otherwise) policy of the sourcing company?.. this would certainly be a good point to start at. They should have some information on this on their website and certainly on any papers you signed. Hope this helps.

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    Thanks Dom.

    Yes . Any fees that you pay to them are non refundable and if a transaction doesn't go through for whatever reason they will give you the option to transfer your fee to another property purchase.

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    It might sound harsh, but this sounds like a case of crying over spilled milk. Would you have bought it is you believed it to be a £20,000 discount rather than £25,000? In all probability, yes.

    Do you actually believe in the “Below Market Value” sales pitch in the first place? Come on..the market value of anything is what they are able to sell it for. If they could get £145,000 or £150,000 for it, they would sell it for that. The fact that you’ve bought it for £125,000 doesn’t make you any sort of incredibly fortunate buyer, you’ve just bought it at the rate they were able to sell it.

    If you could turn around straight away and sell it for £145,000 or £150,000 then I’d stand down and say I’m spouting rubbish..but I’d bet good money that’s not the case.

    Think about it, if the property sourcing company can buy a £150,000 property for £125,000, they sure as hell wouldn’t hand over that £25,000 arbitrage to a complete random buyer, they would keep the opportunity in house and likely buy and sell it themselves.

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    You have a  claim for misrepresentation but you have suffered no loss. The fee was non refundable. The agent complied with the contractual terms to you.

    i feel for you but to pursue for redress you need to have a loss. I don't see any loss. The fee is transferable. You chose not to proceed but that was your choice not theirs.

    So have they been negligent. You would have to prove they knew or should know about the price drop but you still have to prove loss.

    sorry I cannot be more helpful.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    I agree that you don't have much of a case here.  If you have done intense due diligence on the property, and are happy with it, I would ask the agent to reduce their fee by 50% in view of the inaccurate information given and keep you in bed with the deal.

    How much was the sourcing fee out of interest?

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    Thanks for the input Vanessa. I really appreciate it.

    Their fee is £3k + VAT.

    Perhaps agreeing to meet at 50% is an option.

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    I don’t think you have a case, put it down to ‘school fees’, I have a lot of them.

    There are a lot of sharks in this business and you have to be very switched on. Think about it, why would anyone want to hand you over a really good deal? I would say that they would want to keep it for themselves and maybe pass on those that aren’t that great.

    Sorry, I am very sceptical of sourcers but I’m sure that others will disagree.

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